This week the U.S. House of Representatives passed student loan interest rate legislation. The bill now heads to the President who is expected to sign it into law.

The legislation will tie interest rates on federal student loans to the market and, at least in the short term, forestall hefty increases that were to hit new borrowers beginning this fall.

The legislation passed the House of Representatives by a wide margin (392-31, with 10 abstentions) after originating in the Senate, which approved it last week. The measure, when signed by President Obama, will reset interest rates on federally guaranteed loans each July based on the previous May’s auction of 10-year Treasury bills. Undergraduate loans — those that are federally subsidized as well as those that are not — would be set at the Treasury rate plus 2.05 percentage points, while loans for graduate students would be set at 3.6 points above the Treasury rate, and loans for parents at 4.6 percentage points over the T-bill rate. The maximum rate would be capped at 8.25 percent for undergraduate loans, 9.5 percent for graduate student loans, and 10.5 percent for parent loans.